Wall Street surges to near record highs on hopes of COVID-19 vaccine with the Dow closing 800 points higher and the S&P 500 up 1.6%
The S&P 500 and the Dow surged on Monday as the first successful late-stage clinical trial of a COVID-19 vaccine sparked hopes of the economy emerging from a pandemic-driven crisis.
The S&P 500 ended higher but closed just shy of a record as investors bet that a full economic reopening was finally in sight following the first positive data from a late-stage COVID-19 vaccine trial.
Oil prices soared and pushed up energy stocks while safe-haven US Treasuries sold off after drugmaker Pfizer and its German partner BioNTech said a large-scale trial of their vaccine showed it was more than 90% effective in preventing COVID-19.
Pfizer's announcement puts the company on track to apply later this month for emergency-use approval from the Food and Drug Administration.
Saturday's news that Joe Biden had won the presidential election was also a reassuring confirmation of what investors had already been counting on by the end of last week, according to market strategists.
Shares in the US drugmaker surged and global markets also rocketed with the Dow soaring 1,200 points following the announcement.
The Dow dropped off slightly but still closed higher. The Dow ended up rising 839.61 points, or 2.96%, to 29,163.01, the S&P 500 gained 44.25 points, or 1.26%, to 3,553.69 and the Nasdaq Composite dropped 162.91 points, or 1.37%, to 11,732.32.
At 2.42pm on Monday, the Dow Jones Industrial Average rose 1,265.57 points, or 4.47%, to 29,588.97
Donald Trump, who is yet to concede in the election, celebrated the news, tweeting: 'Stock market up big, big vaccine coming soon. Report 90% effective. Such great news!'.
The companies hit hardest by months of travel bans and lockdowns soared, with Boeing Co up 12.6 per cent and airlines and cruise line operators all trading 20 per cent to 30 per cent higher.
Treasury yields and oil prices burst higher as the vaccine news allows investors to feel confident about a stronger economic recovery on the way.
The yield on the 10-year Treasury shot up from 0.81% before the announcement to 0.95%, a very big move for the bond market and one that shows stronger confidence in the economy. The key rate touched its highest level since March earlier in the morning, according to Tradeweb. U.S. oil jumped 8.3%.
Stocks of companies that most need the economy and the world to return to normal for their profits to heal led the way.
An 11.9% surge for Chevron and 12% jump for The Walt Disney Co. amid hopes that people will start driving and flying to theme parks again helped the Dow Jones Industrial Average leap 1,255 points in afternoon trading.
Shares in Uber also surged to 9% and were on track to close above their $45 IPO price for the first time in 18 months.
Cruise operators and owners of office buildings and shopping centers were among the market's biggest winners on expectations people will feel comfortable again riding elevators to a desk or shopping in enclosed stores.
Carnival surged 34.1%, though it's still down by more than half for 2020 so far. It led a resurgence for what are called 'value stocks,' ones whose prices look cheap and had gotten left behind by the rest of the market through the pandemic.
'People are buying those because they see a light at the end of the tunnel,' said Todd Morgan, chairman at Bel Air Investment Advisors.
The S&P 500 gained 94.72 points, or 2.70%, to 3,604.16 by Monday afternoon
The Nasdaq Composite added 12.37 points, or 0.1%, to 11,907.60
Meanwhile, the Big Tech companies that earlier drove the market higher in the pandemic, in large part because they didn´t need a 'normal' economy to succeed, were lagging behind. That kept a lid on the gains for the Nasdaq composite, which rose by less than 0.1%
Companies whose fortunes soared directly because the pandemic kept everyone hunkered at home, meanwhile, fell sharply. Zoom Video Communications, whose online meetings allow millions of remote students and workers to communicate, sank 14.9%.
Grubhub, which benefited from people ordering in for dinner, dropped 10.2%. Etsy, whose online marketplace rode a wave of popularity for handmade masks, lost 12.6%.
Netflix Inc fell 6.6% and Amazon.com Inc 2.8%, while exercise bike maker Peloton Interactive Inc plunged 15.6%, limiting the Nasdaq's.
U.S. banks including Citigroup Inc and Bank of America Corp, often seen as a proxy for the broader economy, jumped about 9 per cent each, while oil majors Exxon Mobil Corp and Chevron Corp climbed about 10 per cent.
President Donald Trump, who is yet to concede after losing to Joe Biden, tweeted on Monday: 'Stock market up big, big vaccine coming soon. Report 90% effective. Such great news!'
Pfizer said Monday that an early peek at the data on its coronavirus vaccine suggests the shots may be a surprisingly robust 90 per cent effective at preventing COVID-19
PFIZER'S VACCINE ANNOUNCEMENT: WHEN WILL A VACCINE BE AVAILABLE IN US?
Pfizer's announcement today is based on an interim analysis in the Phase 3 clinical trial that has been underway since July.
The drugmaker said the results of the interim analysis were announced after a discussion with the FDA. The company said that, based on those discussions, they opted to conduct the interim analysis at a minimum of 62 cases instead of an initial 32-case figure.
The 90 percent rate is based on 94 cases.
Pfizer doesn't plan to stop its study until it records 164 cases among all the volunteers - a number that the FDA has agreed is enough to tell how well the vaccine is working.
The FDA has also said companies must track half their participants for side effects for at least two months, which Pfizer says it expects to reach later this month.
Pfizer has cautioned that the initial protection rate might change by the time the study ends.
The 90% efficacy rate is above the 50% effectiveness required by the FDA for a vaccine.
Pfizer expects to produce up to 1.3 billion doses of the vaccine in 2021.
To save time, the company began manufacturing the vaccine before they knew whether it would be effective.
They now expect to produce up to 50 million doses, or enough to protect 25 million people, by the end of this year.
The timing of Pfizer's announcement, which came soon after Joe Biden claimed victory and less than a week after the election, has already raised questions given Trump had repeatedly said a vaccine would be ready before the election.
His son, Don Jr., was immediately skeptical, tweeting: 'The timing of this is pretty amazing. Nothing nefarious about the timing of this at all right?'
The blue-chip Dow surged as much as 5.7 per cent following the news, also getting a boost from Joe Biden clinching a tightly-fought presidential election.
Oil prices surged more than 10 per cent and U.S. Treasuries sold off after Pfizer and BioNTech said the data showed the vaccine was more than 90 per cent effective in preventing COVID-19.
'This is extremely important and should give the market confidence that Pfizer's candidate offers a breakthrough in terms of reaching herd immunity at some point next year,' said Robin Winkler, strategist at Deutsche Bank Research.
Pfizer and BioNTech, the first drugmakers to show successful data from a large-scale clinical trial, said they had found no serious safety concerns so far and expect to seek U.S. emergency use authorization later this month.
World stocks hit a record high earlier in the day and the dollar remained weak as expectations of better global trade ties and more monetary stimulus under President-elect Biden lifted demand for risky assets.
Treasury yields had fallen last week on expectations that Biden would win the White House but the Senate would be controlled by Republicans, potentially stifling a fiscal stimulus package and putting the onus back on the Federal Reserve.
Among other movers, McDonald's Corp gained about 1.0 per cent after it beat third-quarter revenue and profit estimates, as U.S. customers ordered more hamburgers and fries in drive-through outlets and on delivery apps.
Advancing issues outnumbered decliners 5.95-to-1 on the NYSE and 3.78-to-1 on the Nasdaq.
The S&P index recorded 138 new 52-week highs and one new low, while the Nasdaq recorded 219 new highs and 11 new lows.
Trader Michael Capolino works on the floor, Monday. Stocks around the world are surging Monday, sending Wall Street back to record heights, on a burst of hope following encouraging data for a potential COVID-19 vaccine
Pfizer had initially said it would know if its vaccine was effective by October but shifted that timeline last month to say it expects to seek US authorization from the FDA in the third week of November for emergency use of the vaccine.
In its announcement, Pfizer said the results of the interim analysis were announced after a discussion with the FDA. It is not yet clear exactly what those discussions involved or when they occurred.
Revealing such early data is unusual in a clinical trial and it wasn't immediately clear why Pfizer opted to announce the early findings today. Pfizer's CEO and its head of vaccine research immediately sought to distance themselves from the timing of the announcement, insisting they weren't being driven by politics.
The Trump administration has paid $1.95 billion for 100 million initial doses of the Pfizer vaccine. Pfizer says it could have up to 50 million doses available by the end of this year if approved.
Pfizer's announcement on Monday, however, doesn't mean a vaccine is imminent: This interim analysis looked at 94 infections recorded so far in a study that has enrolled nearly 44,000 people in the US and five other countries.
The company cautioned that the initial protection rate might change by the time the study ends. Even revealing such early data is highly unusual.
Pfizer doesn't plan to stop its study until it records 164 infections among all the volunteers - a number that the FDA has agreed is enough to tell how well the vaccine is working.
The FDA has also said companies must track half their participants for side effects for at least two months, which Pfizer says it expects to reach later this month.
Pfizer said it expects to produce up to 1.3 billion doses of the vaccine in 2021.
Dr. Anthony Fauci, the government's top-infectious disease expert, said the results suggesting 90% effectiveness are 'just extraordinary,' adding: 'Not very many people expected it would be as high as that.'
'It's going to have a major impact on everything we do with respect to COVID,' Fauci said.